Agent demands $10K for doing nothing

Dear Real Estate Adviser,
I've listed my house with a terrible agent, signing a one-year listing agreement with a $10,000 termination fee. From the start, I was clear on the pricing and told her not to take me on if she didn't agree. Soon after signing, her attitude changed. As I was having a pricing dispute with her via email, she came over and removed all the yard signs! I assumed she was terminating, but she sent an email saying she'd just be doing the bare minimum from now on. (She also violated the contract by not listing my home on the multiple listing service by a stipulated date.) Now she wants the money.
-- Jean L.

Dear Jean,
I'll get right to your question as soon as my pupils unconstrict. The shock of seeing the words "$10,000 termination fee" in a residential sale, after all, tends to bring on temporary physiological changes in people.

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Yet I have to admit that getting 10 grand for doing nothing is good work if you can get it. Just 10 such meltdown terminations a year and you're pulling down six figures!

As outlandish as this fee sounds, I trust you're not "trolling" or "punking" me and merely have an unethical and potentially fraudulent agent on your hands -- and that you are perhaps not the world's best negotiator. (But I gotta know: Does she want her 10 "large" in nonsequential unmarked bills?)

I have heard of listing-agreement termination fees before but they're usually designed to cover marketing and out-of-pocket expenses, which are typically no more than $1,000. Unless your agent rented out multiple billboards to sell your house or a series of quarter-page newspaper ads or opted to gold-plate your yard signs and fliers, that figure seems just a tad out of whack.

Certainly, agents will insist on at least a partial commission (if not all) if a buyer introduced to the seller during the listing period completes that purchase later on -- though that doesn't sound like it happened here. Or sometimes brokerages ask for nominal buyout fee if the owner wants to terminate -- but they aren't "hit-man" high like that.

Yet somewhere on that problematic contract of yours are the words "$10,000 termination fee." However, as you stated, it looks like she wanted to terminate and her erratic, bad-faith actions seem consistent with that. I am left wondering why this agent felt compelled to remove all the yard signs and then said she would do the bare minimum henceforth. Make a list of her actions (and inactions), including her flub on the MLS listing deadline. So armed, call the agent's office and speak with the office manager or employing broker about her conduct and her demands. Failing that, file a complaint with your state's department of real estate and possibly a grievance with the local board of Realtors, though you should realize Realtor boards are not enforcement bodies.

Technically, the agent could try to hold you to the contract money in court but it would be fairly obvious to a judge or arbitrator that she had regressed into give-up mode, and an angry mode at that. It's quite possible she tried to provoke you into firing her so she could flash that menacing $10,000 trump card.

As for the one-year contract, please shorten it next time. Long contracts tend to beget complacency. If an agent can't help you sell your house in six months in most markets, something's probably wrong. If the market is soft and it's apparent the agent is really trying, you can simply re-up the agreement another two or three months if you want.

If you haven't technically fired this agent, you probably have the option to just let the listing expire, assuming you afford to hold onto your home that long. In the worst case, of course, you'll have to hire counsel. But something tells me it won't get that far and the five-figure demand is mostly bluster from a person who is ill-suited to her profession and who makes all the good agents that constitute the majority look bad.

Good luck!

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